Critical Analysis: American Electric Power (AEP) versus MYR Group (MYRG)

American Electric Power (NYSE: AEP) and MYR Group (NASDAQ:MYRG) are both utilities companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, analyst recommendations, profitability, valuation, risk, institutional ownership and earnings.

Insider & Institutional Ownership

71.6% of American Electric Power shares are held by institutional investors. Comparatively, 89.3% of MYR Group shares are held by institutional investors. 0.2% of American Electric Power shares are held by insiders. Comparatively, 4.9% of MYR Group shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares American Electric Power and MYR Group’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
American Electric Power $15.40 billion 2.12 $1.91 billion $3.87 17.16
MYR Group $1.40 billion 0.35 $21.15 million $1.27 23.73

American Electric Power has higher revenue and earnings than MYR Group. American Electric Power is trading at a lower price-to-earnings ratio than MYR Group, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares American Electric Power and MYR Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
American Electric Power 12.39% 10.05% 2.86%
MYR Group 1.51% 4.90% 2.28%

Risk & Volatility

American Electric Power has a beta of 0.22, suggesting that its stock price is 78% less volatile than the S&P 500. Comparatively, MYR Group has a beta of 0.45, suggesting that its stock price is 55% less volatile than the S&P 500.

Dividends

American Electric Power pays an annual dividend of $2.48 per share and has a dividend yield of 3.7%. MYR Group does not pay a dividend. American Electric Power pays out 64.1% of its earnings in the form of a dividend. MYR Group has raised its dividend for 5 consecutive years.

Analyst Recommendations

This is a summary of recent recommendations and price targets for American Electric Power and MYR Group, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
American Electric Power 0 5 9 0 2.64
MYR Group 0 4 2 0 2.33

American Electric Power presently has a consensus price target of $74.31, indicating a potential upside of 11.93%. MYR Group has a consensus price target of $34.80, indicating a potential upside of 15.46%. Given MYR Group’s higher probable upside, analysts clearly believe MYR Group is more favorable than American Electric Power.

Summary

American Electric Power beats MYR Group on 10 of the 17 factors compared between the two stocks.

American Electric Power Company Profile

American Electric Power Company, Inc. (AEP) is a public utility holding company that owns, directly or indirectly, all of the outstanding common stock of its public utility subsidiaries and varying percentages of other subsidiaries. The service areas of the Company’s public utility subsidiaries cover the states of Arkansas, Indiana, Kentucky, Louisiana, Michigan, Ohio, Oklahoma, Tennessee, Texas, Virginia and West Virginia. The Company’s segments include Vertically Integrated Utilities, Transmission and Distribution Utilities, AEP Transmission Holdco, and Generation & Marketing. AEP’s vertically integrated utility operations are engaged in the generation, transmission and distribution of electricity for sale to retail and wholesale customers. Transmission and Distribution Utilities segment consists of the transmission and distribution of electricity for sale to retail and wholesale customers. AEP Transmission Holdco develops, constructs and operates transmission facilities.

MYR Group Company Profile

MYR Group Inc., through its subsidiaries, provides electrical construction services in the United States and Canada. It operates in two segments, Transmission and Distribution, and Commercial and Industrial. The Transmission and Distribution segment offers a range of services on electric transmission and distribution networks, and substation facilities, including design, engineering, procurement, construction, upgrade, maintenance, and repair services with primary focus on construction, maintenance, and repair to customers in the electric utility and the renewable energy industries. Its services include construction and maintenance of high voltage transmission lines, substations, and lower voltage underground and overhead distribution systems; and emergency restoration services in response to hurricane, ice, or other storm related damages. This segment serves as a prime contractor to customers, such as investor-owned utilities, cooperatives, private developers, government-funded utilities, independent power producers, independent transmission companies, industrial facility owners, and other contractors. The Commercial and Industrial segment provides services, such as design, installation, maintenance, and repair of commercial and industrial wiring; and installation of traffic networks, bridge, roadway, and tunnel lighting. This segment offers its services for airports, hospitals, data centers, hotels, stadiums, convention centers, manufacturing plants, processing facilities, waste-water treatment facilities, mining facilities, and transportation control and management systems. It serves general contractors, commercial and industrial facility owners, local governments, and developers. MYR Group Inc. was founded in 1891 and is headquartered in Rolling Meadows, Illinois.

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